◎ We made 32 predictions covering eight topics in our China 2025 Outlook. Twenty-seven of those predictions were verified over the year, giving us a forecasting accuracy of 84.4 percent.
Xi Jinping remained firmly in control of the CCP and the Chinese regime in 2025 despite endless rumors stemming from Chinese diaspora media that he was “losing power.”
Meanwhile, China’s economy continued to worsen in 2025 even as Beijing introduced policies to reverse the decline.
Politics: 4 predictions, 4 verified
1. The CCP is unlikely to significantly alter its propaganda about Xi Jinping or how he is regarded politically. VERIFIED
- The “Two Establishes” and “Two Safeguards” continued to form the core of CCP political discourse in 2025, with no visible loosening of the power structure.
2. The CCP will strengthen ideological indoctrination and political brainwashing among Party, government, and military personnel. VERIFIED
- Digital supervision tools such as “Xuexi Qiangguo” (學習強國) became more deeply integrated into performance evaluation systems in 2025.
3. Xi Jinping’s “self-revolution” and anti-corruption efforts could be expanded. Xi’s close associates might not be safe from upcoming purges. VERIFIED
- 181 officials under central management were purged in 2025, an increase of 96.7 percent from the previous year. In the same year, He Weidong, former vice chairman of the Central Military Commission (He and CMC political department head Miao Hua, who was purged in 2024, are both regarded by some political observers as key members of Xi’s so-called “Fujian faction”) was investigated. Other officials whom external observers considered to be part of the so-called “Xi clan” were also investigated, including former China Securities Regulatory Commission chairman Yi Huiman, former Shanxi governor Jin Xiangjun, and Eastern Theater Command commander Lin Xiangyang.
4. Negative information about Xi Jinping will continue to circulate externally. This includes rumors and speculation that Xi has “lost power” and suffers from “health issues.” VERIFIED
- Overseas social media and independent outlets repeatedly amplified speculation about Xi health and succession following major political events such as the Two Sessions.
Economy: 10 predictions, 8 verified
5. China’s real estate sector decline will neither be stabilized nor reversed. VERIFIED
- Homebuyer sentiment and price levels continued to decline in 2025 despite Beijing’s “white list” financing and inventory purchase policies.
6. The CCP’s “proactive fiscal policy” and “moderately loose monetary policy” will not do much to reverse deflation and other economic woes in China. VERIFIED
- CPI remained near zero throughout 2025, indicating weak monetary transmission.
7. The central government’s debt restructuring policies will not stop the worsening of local government fiscal shortages. VERIFIED
- “Time-for-space” debt swaps alleviated interest burdens, but did not prevent wage arrears or reductions in public services.
8. The average net interest margin of banks will continue to shrink. VERIFIED
- State-owned banks were compelled to cut lending rates further, pushing margins below the 1.5 percent threshold.
9. China 10-year government bond yields will remain in a low range (around 2.2 percent and below). VERIFIED
- Persistent asset scarcity drove capital into the bond market, with yields fluctuating within a low range of 1.5958 percent to 1.9022 percent.
10. China’s overcapacity problems will worsen. This will lead to excessive competition (內卷 [involution], including price wars) in China. This could also heighten the PRC’s trade conflicts with other countries, leading to sanctions. VERIFIED
- Price wars in China’s EV and photovoltaic sectors intensified, reflecting worsening overcapacity problems. The export of excess capacity also prompted large-scale tariffs from Europe and the United States.
11. The renminbi could face depreciationary pressures in 2025. Barring extreme circumstances, the RMB exchange rate could range between 7.3 to 7.8 to the dollar.
12. China’s exports will continue to slow.
- China’s trade frictions with major countries intensified. However, Chinese firms redirected exports via “Global South” markets (e.g., ASEAN, the Middle East), maintaining volume growth while profit margins contracted.
13. The CCP will unilaterally expand the scale and scope of opening up China’s markets to the world. VERIFIED
- Visa-free policies expanded and foreign investment access in manufacturing and finance was further liberalized in 2025.
14. China will see sustained capital outflows. VERIFIED
- Wealthy individuals sought to bypass capital controls via gold purchases and offshore insurance, placing pressure on foreign exchange reserves.
Military: 2 predictions, 2 verified
15. The CCP will seek to avoid triggering serious military conflicts in the region. However, the CCP will continue to sound tough in its propaganda. VERIFIED
- In 2025, PLA exercises around Taiwan and the South China Sea remained frequent but calibrated below the threshold of direct conflict.
16. The CCP will increase the use of non-military or paramilitary forces in the South China Sea and East China Sea to maintain its influence. VERIFIED
- The PRC Coast Guard and maritime militia frequently clashed with the Philippines and Japan in 2025, normalizing “gray-zone” operations.
Society: 4 predictions, 3 verified
17. The CCP will intensify societal controls. This includes tightening restrictions on speech and closely monitoring the “four withouts and five losses” (四無五失) to prevent the emergence of large-scale, unorganized social movements. The “four withouts and five losses” refer to people “without” a spouse, children, a job or stable income, and property or other assets, and who have suffered “losses” in the form of investment failure, setbacks in life, broken relationships, psychological imbalance, and mental disorders. VERIFIED
- Following the Zhuhai incident in late 2024, authorities expanded grid-based surveillance systems in 2025 to monitor at-risk populations.
18. Social problems in China could become increasingly intense. This includes growing incidence of collective wage disputes, protests over financial rights, malicious acts of “revenge against society,” and large-scale social movements that appear to lack coordinated organization. VERIFIED
- Multiple high-profile attacks and confrontations in 2025 reflected rising social volatility.
19. Fiscal shortages could drive local governments to increasingly “squeeze” private enterprises and the public for funds. Local governments could also increasingly come into conflict with each other as they move to protect local revenue streams. VERIFIED
- “Deep-sea fishing”-style enforcement actions triggered widespread protests, while fiscal disputes between central and local governments became more visible.
20. The COVID-19 pandemic and other pandemics could circulate in mainland China. However, the CCP authorities could attempt to downplay the situation or feign ignorance of the matter.
- While seasonal flu and mycoplasma outbreaks occurred, no major disruptive pandemic emerged, and public sensitivity to health risks declined significantly.
Hong Kong: 1 predictions, 1 verified
21. Hong Kong’s economy will likely deteriorate further. VERIFIED
- Hong Kong’s macroeconomic indicators showed that the territory did not enter into recession in 2025. However, the local consumer market and the operating environment for small and micro businesses deteriorated further, while the structural downturn in the property market intensified.
Cross-Strait relations: 3 predictions, 3 verified
22. The United States will continue to strengthen its support for Taiwan in various areas. This includes military matters (i.e. military equipment sales, training, joint exercises, etc.) and advocating for Taiwan’s participation in some international organizations. VERIFIED
- The U.S. implemented expanded military aid and joint training with Taiwan under the National Defense Authorization Act in 2025.
23. Taiwan’s ruling Democratic Progressive Party could face significant governance challenges due to interference from the opposition-controlled parliament. The DPP could find it difficult to implement various policies, including increasing military expenditures. VERIFIED
- Taiwan’s legislature repeatedly blocked initiatives or froze major budgets, resulting in prolonged political gridlock.
24. The CCP will continue using its military to intimidate Taiwan, but could regulate the intensity of its intimidation to avoid accidental incidents or conflicts. VERIFIED
- PRC exercises targeting Taiwan such as “Sharp Sword-2025” were large-scale but shorter in duration, signaling deterrence rather than imminent escalation.
US-China relations: 6 predictions, 5 verified
25. The Trump administration could gradually impose additional tariffs on Chinese goods, including products from Chinese-owned factories outside the mainland. VERIFIED
- Following Trump’s inauguration in January 2025, he escalated tariffs on China to as much as 145 percent at one point. The average effective rate on all goods was eventually lowered to around 29-32 percent after negotiations.
26. The Trump administration could take measures that attract capital away from China. VERIFIED
- Enhanced U.S. domestic tax incentives and China tariffs led some multinational firms to scale back China-based production.
27. The United States will intensify technological competition with China, including imposing new tech restrictions. VERIFIED
- The Trump administration appeared to expand the Biden administration’s “small yard, high fence” policies further in AI, quantum computing, and semiconductors.
28. The United States could place greater emphasis on addressing various CCP threats and infiltration to shore up national security.
- The 2025 National Security Strategy favored economic balancing and strategic decoupling from China while moving away from ideological competition.
29. The United States could launch a “financial war” against the PRC, including taking measures that curb the internationalization of the RMB. VERIFIED
- The U.S. tightened restrictions on SWIFT alternatives and sanctioned Chinese banks linked to Russia.
30. The United States could strengthen alliances and partnerships in the Indo-Pacific region, as well as bolster its military capabilities there. VERIFIED
- AUKUS and U.S.–Japan–Philippines trilateral cooperation entered operational deployment stages.
China and the world: 2 predictions, 1 verified
31. Various regional conflicts could de-escalate or become “frozen conflicts.” Such shifts in the geopolitical landscape will hinder the CCP’s “multipolarism” agenda and potentially strain the PRC’s bilateral relations (including the China-Russia relationship).
32. Countries will continue to be concerned about CCP subversion and the prospect of a PLA invasion of Taiwan regardless of geopolitical changes. Also, countries will continue to recognize the threat posed by the CCP and take corresponding actions to address them. VERIFIED
- NATO and the EU formally identified Taiwan Strait stability and “de-risking” as core strategic priorities in their 2025 reports.
